Is cutting jobs and streamlining its business going to save Lenovo?

It turns out that being the world’s largest PC manufacturer won’t help you much when you’re trying to expand into the mobile market. Lenovo is learning this the hard way as it suffers from a declining PC market and an inability to find success in the mobile market, both of which are why the company’s income has started to nosedive. In an effort to turn things around, Lenovo has announced that it’s going to be laying off a few thousand employees and will be restructuring its mobile division in order to produce smartphones faster and at a lower cost. 

Lenovo Group today announced results for its first fiscal quarter ended June 30, 2015. Quarterly revenue was US$10.7 billion, a three percent increase year-over-year. First quarter pre-tax income decreased 80 percent year-over-year to US$52 million. Net income declined 51 percent year-over-year to US$105 million. Lenovo saw severe challenges in its main markets. It faced significant declines in the global PC and tablet markets, as well as slowing growth and increasing competition – especially in China – in smartphones. There were macroeconomic challenges in Brazil and Latin America and large currency fluctuations, intensifying competition, which hurt Motorola’s profitability in particular. Finally, Lenovo saw a rapidly shifting technology demand landscape in the enterprise business. Despite this tough environment, Lenovo continued to deliver solid results. Its PC business reached record worldwide share of 20.6 percent. It gained share in every geography and achieved the # 3 position in the critical U.S. market, with record high share of 13 percent.